How Social Security Will Affect the Younger Population
By: Viojieley Gurrobat
Young professionals often spend their career thinking about graduate
school, finding good jobs and providing for their families. But few of
them think about their financial security when they retire or when they
become disabled. But all Americans should be aware that Social Security
will impact their lives one way or another. Social Security allows your
grandparents to live independently throughout their retirement. It can
provide retired workers and their dependents a decent standard of living.
Hence, Social Security could immensely secure you money-wise or could
completely shatter your financial future.
As most of you probably know, Social Security is a pay-as-you-go system.
This means that younger workers are paying for the benefits the older
generation will receive today as they have done too when they were still
young. Simply put, the Social Security taxes that you pay today are paying
the benefits of your parents and grandparents. But some younger workers
fear that Social Security will not be around when they retire. This is
perhaps because there are not enough workers today that would keep the
system solvent. Additionally, medical advancements and improved standard
of living have contributed to longer retirements and longer lives.
If the calculation is true, by 2018 the government will have to pay the
IOUs from the general revenue to pay for the benefits of the retirees,
beneficiaries and disabled individuals. This could put a massive strain in
the budget of the government. So President Bush suggested moving Social
Security from its safe, government-run home to higher yielding private
accounts. With private accounts, you invest your money in your own account
so the government can't use it to fund their researches and as a result
you get higher rate of return. Bush believes that investing in private
accounts could financially secure America's children and grandchildren.
This appealing plan has gathered an overwhelming support from younger
workers. But all the same, not all are convinced. They still worry that
the instability of the market could wipe out their benefits. But if Social
Security is not reformed, benefits will have to be cut down by a quarter
or payroll taxes will have to be increased by fifty percent. Just the
same, reformed or not, Social Security will mostly affect the younger
working population. Whether private accounts are used or taxes are
increased, the duty of eliminating the system's debt lies on younger
workers. Whatever reform will be implemented today will impact the
financial decisions you will make at present. In any case, Social Security
will decide how you plan, save or spend your money over this decade.
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